Which of the following statements about banks is FALSE? Group of answer choices

Which of the following statements about banks is FALSE?

Group of answer choices

1. If it is FDIC-insured, your money is safe even if the bank fails

2. Many banks pay interest on the money you deposit with them

3. Historically, savings accounts earn higher returns than investments in the stock market

4. Money in a bank is usually easy to access via ATM, debit card or check

Answer: 3. Historically, savings accounts earn higher returns than investments in the stock market

Bank savings accounts usually have set interest rates, but they tend to be low. On the other hand, interest rates placed on saving accounts are low compared to inflation figures in the long term. For instance, current interest on a bank’s regular savings account is about 0.06%.

On the other hand, investing in stocks has always been known to have higher investment returns as compared to saving accounts but with more risk associated. This is because, although the stock market fluctuates frequently between its highs and lows but over more extended periods of time such as 10 or even twenty years returns on investments made in the equity markets have consistently been perform better than inflation can offer and also compared to very low fixed deposit interest rates. For example, the S&P 500 stock market index which has been used over the past three decades still delivers an average annual return of a massive ten percent even after factoring in that time period including recessions.

Thus, the conclusion that savings deposits have a better performance in historical terms compared to stock market investments is incorrect . Despite the risks, historical returns over time and protection against inflation have made stock market investments a superior option to savings accounts for growing one’s money.